0537 GMT - The Federal Reserve faces a difficult balancing act, says TwentyFour Asset Management's Felipe Villarroel in a note. "While inflation remains above target and recent developments, particularly higher oil prices linked to tensions in the Middle East, have added upward pressure, the U.S. economy continues to show resilience," the portfolio manager says. Markets are pricing in a 25-basis-point rate hike Wednesday, which TwentyFour also views as the most likely outcome. "More important than the current inflation level is whether inflation returns to target quickly enough to prevent inflation expectations from becoming entrenched," Villarroel says. Chairman Kevin Warsh's recent comments suggest a strong focus on restoring the Fed's inflation-fighting credibility, but this meeting will provide the first real indication of how that translates into policy, Villarroel says.